With a construction loan you can build, buy, renovate or modernize a house. Such a loan, earmarked, is a loan that the borrower can not freely dispose of and must be used according to its purpose. The bank requires evidence, e.g. B. Invoices proving that the loan has been used for the intended purpose. Is the interior decoration also one of the costs covered by the construction financing??
What is construction financing?
What is a construction financing?
Construction financing is a type of mortgage that allows you to build a house or renovate an existing property before you sell it or get the right of ownership. With a construction loan you can also acquire a plot of land.
This type of loan is intended to help you overcome a financial hurdle. The amount of the construction loan covers all costs related to the project, including materials, labor, architectural design and permits.
The dream of having a house
Who grants construction financing?
Construction financing is offered by banks and building societies. If you apply for a building loan, you must usually have sufficient equity capital at your disposal. Some banks also grant a construction loan without equity, but this type of loan usually has a higher interest rate.
Always compare interest rates and terms before you sign!
This dream can come true
How much you can borrow with construction financing?
The amount you can borrow with construction financing depends on a number of factors, including the value of your property , the estimated value of the land, your financial situation, and your equity level.
To determine how much construction financing you can get, it is best to use a budget calculator for the future property
Does construction financing cover interior design as well?
Does the construction financing also cover the interior furnishings??
Construction loans usually cannot be used to finance new furniture or a new kitchen. It is forbidden to use a construction loan to finance something that will not be permanently integrated into the property.
It is possible, however, to take out more construction loans than you need. So if you have taken out a certain loan amount and still have 10.If you have EUR 000 left over, this amount can be at your free disposal, provided that this has been contractually agreed in advance. If this has not been negotiated in the contract, you may not be able to get this amount.
Carports, retrofitted garages, garden sheds or landscaping you usually can't finance with a separate real estate loan either.
You can usually finance a garage or garden remodel with an installment loan if you've lived in your home for some time. However, the bank will not give you a real estate loan for it.
How to make your dream home look beautiful
Conclusion
Construction financing is a type of mortgage that allows you to renovate or build a house. With a construction loan, you can cover all costs associated with the project, including materials, labor, architectural design and permits.
If you apply for a construction loan, you must usually have sufficient equity capital. The amount you can borrow depends on a number of factors, such as the value of your property, your financial situation, and the amount of equity you have in it.
What can't be paid for through construction financing are furniture, kitchens and co, as well as retrofitted carports, garages, garden sheds, landscaping and an addition, as long as the cost is less than 50.000 EUR.